Coinbase Q2 Earnings: Stablecoin Strength Can’t Stop Stock From Slipping Toward $250 Gap Risk

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Coinbase’s second-quarter 2025 results came in with a mix of headline strength and underlying weakness, reflecting both unusual one-time items and a softer trading environment. The company reported total revenue of $1.5 billion, a touch below consensus expectations of $1.59 billion, while EPS was boosted to $5.14 thanks to extraordinary gains. However, adjusted EPS was just $0.12, a sharp drop from the $1.35 consensus. Shares have responded poorly, sliding more than 7% in premarket and breaking below key technical support levels as investors digest the noise around results and management’s guidance for Q3.

The trading platform showed notable softness, with total trading volume down 40% quarter-over-quarter to $237 billion. Consumer trading was particularly weak, falling 45% to $43 billion, while institutional volume declined 38% to $194 billion. These declines were magnified by a 16% drop in crypto volatility and an intentional pricing change to stablecoin pair trading earlier this year, which lowered volumes in Coinbase’s Advanced trading platform. Consumer trading revenue was $650 million (-41% Q/Q), and institutional trading revenue came in at $61 million (-38% Q/Q). While spot activity cooled, Coinbase highlighted record highs in derivatives trading internationally and all-time high Prime Financing loan balances, pointing to diversification beyond core spot trading.

On the revenue mix side, subscription and services revenue provided partial support, totaling $656 million, down 6% from Q1. The star performer within that bucket was stablecoin revenue, which grew 12% sequentially to $332 million. This growth was driven by a 13% increase in average USDC balances, reaching $13.8 billion. Mizuho noted that Coinbase’s stablecoin revenue represents roughly 53% of Circle’s gross reserve income, suggesting distribution costs for Circle remain heavy—a dynamic that could weigh on CRCL margins longer term. Blockchain rewards revenue, by contrast, fell 26% to $145 million due to weaker prices in Ethereum and Solana, along with lower reward rates. Other subscription lines, including custodial fees, also slipped modestly despite record $245.7 billion in assets under custody, which now account for more than 80% of U.S. BTC and ETH ETF holdings.

The bottom line was significantly distorted by one-time items. Coinbase booked a $1.5 billion unrealized gain from strategic investments, primarily its stake in Circle, along with a $362 million gain on crypto asset remeasurement. These were partially offset by a $307 million charge tied to the May data theft incident, which included customer reimbursements and legal costs. As a result, net income soared to $1.4 billion, but adjusted net income—excluding these unusual items—was only $33 million, underscoring the gap between headline and underlying profitability. Adjusted EBITDA of $512 million reflected some operational strength but also marked a steep sequential decline from Q1’s $930 million.

Guidance for Q3 was cautious but constructive. Management expects subscription and services revenue of $665 million to $745 million, up sequentially at the midpoint. July transaction revenue was reported at roughly $360 million, indicating a stronger start to Q3 amid higher asset prices and volatility. Technology, development, and G&A expenses are projected at $800–$850 million, reflecting headcount growth tied to international expansion and new product initiatives, while sales and marketing will range from $190–$290 million depending on conditions. CEO Brian Armstrong emphasized Coinbase’s push to evolve into an “everything exchange,” highlighting progress on derivatives, tokenization, and stablecoin payments—including Shopify integrations.

The best-performing area was stablecoin revenue, buoyed by USDC adoption across platforms and payment use cases, including Shopify. Prime Financing also set records with all-time high average loan balances, showing momentum in Coinbase’s institutional lending business. On the weaker side, consumer trading was the biggest drag, with both volume and revenue seeing sharp declines, while blockchain rewards revenue suffered from softer token prices and lower protocol rewards.

Analysts remain divided in their reactions. Citizens Bank noted the results were noisy but broadly in line with their expectations, maintaining an Outperform rating and a $440 target while emphasizing Coinbase’s role as the “everything exchange.” Mizuho, meanwhile, flagged risks to Circle’s economics from Coinbase’s growing stablecoin revenue share, maintaining its Underperform stance on CRCL.

From a technical perspective, shares of Coinbase are at an inflection point. The stock has broken below key support levels and now risks filling a gap down to the $250 area. The 50-day moving average, currently near $325, is the critical level to watch. A decisive break below this mark could accelerate downside momentum, making the $250 gap-fill scenario more likely. With earnings noise clouding the picture and sentiment pressured by declining spot volumes, traders will be watching closely whether buyers can defend the 50-day. If not, the next leg lower may already be in motion.